Advantages, Disadvantages and Myths
About Bankruptcy

Advantages

• Protects the equity in your home from attachment by your creditors (up to a legal limit)
• Allows you to reaffirm on your home and car loans and keep those items moving forward
• Allows you to get caught up on past due home and car loan payments in an amount you can afford
• Immediately stops lawsuits and home foreclosures
• Stops interest, late fees and over limit fees on credit cards
• May allow for reinstatement of a driver’s license suspended following an uninsured accident
• Discharges your personal responsibility for unsecured debt
• Silences harassing creditor collection calls & letters
• Allows peace of mind moving forward
• Permits a “fresh start” toward financial freedom

Disadvantages

• A bankruptcy stays on your credit report for up to 10 years
• Mortgage lenders in the future may require a larger down-payment
• Auto lenders may charge a higher interest rate
• Chapter 7 bankruptcies are considered “newsworthy” by the media so your name may be published in the newspaper

Myths

• Filing for bankruptcy is a sin
• I’ll be required to surrender my house and car
• I can choose which creditors I want to include in my bankruptcy and keep paying on the ones I don’t
• I’ll never get credit again
• My employer gets notice of my bankruptcy
• My employer can fire me for filing bankruptcy
• If I’m married, my spouse has to file too
• In order to keep my car and other favorite items, I should transfer them to a family member or friend
• All my debts are wiped out in my bankruptcy
• You can’t get rid of past due income taxes in a bankruptcy
• I can take out a payday loan to pay my bankruptcy attorney and have that debt discharged
• I can keep using my credit cards up to the day before filing in bankruptcy